Benefits of Automation in the World of FinTech

The financial industry is facing its greatest technological challenge: the FinTech phenomenon. Addressing this change, which involves many different areas and technologies, requires a comprehensive approach to prevent operational and technological chaos.
Given this scenario, automation is presented as the unified solution the problem requires. Features such as semantics and process automation can offer their benefits to the changes that will be performed in different areas: business services, online services and data management.

 

The financial industry is immersed in a process of technological renewal. The opportunities offered by new technologies and the emergence of new players, many of them coming from other industries (Google, Amazon, Apple ..), have forced the industry to make a move.

The FinTech phenomenon involves changes in many different areas with many different technologies. This leads to a complex scenario where the problem must be addressed from a global perspective, otherwise there is a risk of running into an operational and technological chaos.

New techniques in Software Automation suggest this methodology as a good solution to tackle the challenge.

Software automation raises the technical solution to the conceptual level where operates the business. This higher point of view provides the more comprehensive and unified approach required to address FinTech changes.

From a technical perspective, software automation is based on the creation of more abstract programming languages which allows the automation of the technical details and gives the system more semantic richness. These languages are known as DSLs and the tool to manage them Language Workbench.

Benefits.
1.Process automation.
Working in a more abstract level allows not only the automation of technical process but also the automation of traditional business processes. Decision engines, risk based pricing, default prediction and fraud detection are examples of processes that can be improved under this perspective.

2.Semantics.
The new way of defining programming languages, based on the concepts that structure them, opens the door to Knowledge Representation. This discipline, a traditional field of artificial intelligence, is increasingly being applied to data processing (visualization, searching, analysis, decision making …) and in the future will be essential to any process of analysis and interaction, either with customers or with other systems. XBRL– eXtensible Business Reporting Language – and FIBO – Financial Industry Business Ontology – are examples of semantics applied to financial industry

3.Less technical complexity.
Again, the higher level of abstraction of the languages allows to solve, automatically, much of the technical details inherent to the different solutions. This automation of complexity results in quality, safety, standardization and other software features.

4.Multi-platform.
Having the control of programming languages, the same development can be translated into multiple platforms without having to perform a new project for each new device.

5.Business oriented.
Once the programming languages are closer to the business, developers can focus on providing a solution from the business point of view and not from a technical perspective. It also breaks down the traditional communication barriers between the development areas and the rest of areas of the company.

Enhanced areas.
FinTech is working on multiple areas in which the automation can provide advantages. We can group them into three main blocks: business services, online services and data management.

1.Business services.
Meeting customers’ new demands and productivity improvement are objectives that are moving the industry to act over their more traditional structures. Automation provides advantages on:

Decentralization. To perform the decentralization of services (call centers, back office…), their applications need to migrate to a web environment. This is a major challenge because the systems must keep the traditional desktop applications features: safety, speed and user-experience. Automation provides a more efficient way to develop Desktop Web Applications.

Portfolio management. The automation of processes provides a more streamlined management. On the other hand, the semantics allows a unified management of heterogeneous portfolios and the integration of external ones.

Compliance. Semantics, along with the use of business-oriented languages facilitate audit analysis processes and the deployment of its documents. Beside this, process automation is the best way to solve compliance issues.

Legacy systems. The higher level of abstraction provides a straightforward way to design interfaces with legacy systems.

2.Online services.
The emergence of new devices, the improvement of communications and a new digital culture have made institutions open their doors in order to supply a more interactive management to their customers. Again automation provides benefits in this area:

Accessibility. Multi-platform can multiply the ways of interaction.

Financial education. Semantics gives the systems documentation and visualization capabilities facilitating its handling and understanding.

Personal Management. As a result of the previous points, the customer can perform a more personal management of their data and assets. As mentioned, the semantics play a major role in the interaction with the customer.

New Banking. Multi-platform, semantics and process automation enable new business lines such as personalized offers, payment platforms, crypto-currencies, proactive risk analysis and others.

3.Data management.
A more interactive relation with the customer and the new methodologies to process that information have revolutionized traditional CRM techniques and the whole data management. Automation benefits next areas:

Back office automation. The automation of back office means the automation of its workflows. The possibilities powered by semantic to design “smarter” decision engines, together with process automation, are key lines to achieve this goal.

Reporting. Semantics is increasingly being a part of reporting. XBRL is a good example.

Security. Process automation enhances the security in data processing.

Big Data. We can summarize – this point would require an entire article – that semantics, process automation and a higher level of abstraction allows, on one hand, to handle the variability of the data and, on the other, mitigate the risks associated with the unstructured schemas of Big Data.

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Conclusion.
The financial sector is facing one of the greatest technological challenges in its history, involving changes in many different areas with many different technologies.

Software automation provides the global and unified approach required in this scenario, otherwise, individual approaches can lead the companies to a technological landscape very hard to manage.

 

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Posted on July 31, 2014, in Academic, bheudek and tagged , , . Bookmark the permalink. Leave a comment.

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